Thursday, February 18, 2010

Construction Cost Update

Higher nominal housing prices would improve economic efficiency, and the costs of construction are an important determinant of housing prices.

The chart below shows how construction costs stopped falling in the first half 2009, but that the increase since then has been minor. Today's BLS estimate of Jan 2010 construction costs did not add to the increase.

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Supply and Demand (in that order)

The basic tools of supply and demand help immensely to understand and predict everyday events in our world. These days, many of those events are related to the Redistribution Recession of 2008-9. But I also look at other issues related to fiscal policy, labor economics, and industrial organization.